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Shareholders in Northern Rock have failed in their attempt to win compensation from the government over the bank's nationalisation.
The high court ruled against two hedge funds which claimed the government had seized their shares in the Newcastle-based bank at an unfairly low price.
Lord Justice Stanley Burnton said that the provisions made to compensate shareholders "do not infringe their rights". However, he also granted the shareholders leave to appeal.
The ruling came almost a year after Northern Rock was nationalised. RAB Capital and SRM Global, which brought today's case, owned nearly a fifth of Northern Rock by the time it was taken into public ownership. Both hedge funds bought large numbers of shares in the months between Northern Rock seeking help from the Bank of England, and its subsequent nationalisation. Around 150,000 small shareholders also took part in the case.
Lord Justice Burnton said that the high court had "some sympathy for the position of the former long-term shareholders".
"Ultimately, however, they entrusted their investment to the hands of the management of the company. As it turned out, their business plan was flawed and could not survive the unprecedented circumstances of the latter part of 2007," he said.
Shares in Northern Rock were worth around 90p when Alistair Darling took the decision to seize control, but it is unclear how much - if anything - shareholders will receive. An independent auditor has been appointed to assess how much the shares were worth at the time, based on the assumption that the business would have *otherwise gone into administration. Northern Rock was being propped up by close to £30bn of taxpayers money at the time it was nationalised.
Shareholders, though, argued that the government could have sold the business to a private investor. A bid from Virgin founder Sir Richard Branson was still on the table, as was the possibility of a management buyout.
RAB Capital and SRM Global argued that the Northern Rock shares were worth at least 300p each.
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